The business behind the show

New round of speculation starts on GE's plans for NBC Universal

September 9, 2009 | 2:10
pm

It's time to play everyone's guessing favorite game -- "What will General Electric do with NBC Universal?"

Ever since GE bought NBC parent RCA in 1986 for $6.5 billion, analysts and industry observers have made a career out of speculating when (it's never if) GE will unload NBC. GE, though, keeps messing up the game by letting NBC acquire more entertainment assets, rather selling them. Now NBC's a leading candidate to buy the Travel Channel from Cox Communications, which would be a nice fit with the Weather Channel -- after all, you always want to know what the weather is like where you're traveling, ergo, media "synergy."

The reasons people think GE should unload NBC haven't changed in 23 years. The entertainment giant, whose holdings include NBC, cable networks USA, Syfy, Bravo, CNBC and MSNBC and movie studio Universal Pictures, really isn't a fit with the rest of industrial conglomerate's assets, such as jet engines, light bulbs and MRI machines.

In a report issued earlier this week, J.P. Morgan analyst Stephen Tusa valued NBC Universal at between $30 billion and $35 billion and added that the unit "is commanding no value in the GE stock price." (That value, by the way, is off from $44 billion in his April 2008 report). Tusa speculated that Disney's recent $4 billion deal for Marvel suggests that "major media companies still see value in content." For its part, GE CEO Jeffrey Immelt hasn't given any indications of looking to unload NBC and, as Broadcasting & Cable's Claire Atkinson reminds us in her analysis of the NBC situation, he even said in last year's annual report that selling the entertainment unit "doesn't make sense."

Furthering the latest round of speculation is Vivendi, the French company that has a 20% stake in NBC. Vivendi's annual option to keep its stake, sell it back to GE or, if GE passes on that, spin it off to the public, is up for renewal in December. In a previous interview, Vivendi CEO Jean-Bernard Levy sent mixed signals about his intentions. He told our Meg James earlier this year that the company is pleased with NBC and is a fan of its CEO Jeff Zucker, but at the same time noted "we are not long-term owners" and added he'd rather be in the "driver's seat" of its investments. That sounds like a big, fat when to us, and not an if.

Let's take Immelt with a grain of salt for a moment and assume that maybe GE is thinking of unloading NBC sooner or later. The likeliest suspect to buy it is cash-flush Time Warner, which would certainly like those cable networks. But one has to think that regulators might be a little wary of a deal that would place so many powerful networks in the hands of one company. The same dilemma could face cable giant Comcast. While its programming holdings are pretty slim, it is the country's largest cable operator -- it has a wire hooked up to one out of every five household's in the U.S. -- and if it suddenly also became the biggest programmer, that could raise eyebrows in Washington.

An even tougher sell would be NBC itself and the studio. Here's a crazy, fun, never-would-happen idea. Viacom buys NBC and then partners again with CBS. Yes, broadcast television is a fading business, but owning two big networks is not a bad hand to have. And the meetings between Zucker and CBS CEO Leslie Moonves would be priceless.